tv Nightly Business Report PBS May 4, 2013 1:00am-1:31am PDT
this is "nightly business report" with tyler mathisen and susie gharib, brought to you by -- >> the street.com, interactive multimedia tools for an ever changing world. our dividend stock adviser, guides, helps generate income during a period of low interest rates. real money helps you think through ideas for investing and trading stocks. action alerts plus is a charitable trust portfolio that provides trade-by-trade strategies. online, mobile, social media. we are thestreet.com. an historic day. the bulls charge ahead as stocks rally to all-time highs. where to put your money now. we'll get stock picks for this lofty market with top money manager mario gabelli. >> stocks were so hot and so was
hiring, a better than expected jobs report. so the economy healthier than many think? >> and tonight we'll met the man who solved the riddle of how to take a simple idea and turn it into a very successful business. all that and more tonight on "nightly business report" for friday, may 3rd. good evening, everyone. susie, stocks soared at the outset and kept on going pretty much right up until the close. a perfect day for you to be at one of the biggest investor events of the year. >> you're absolutely right, tyler. good evening, everyone. i'm here in omaha forewa forewarn warren buffett's shareholder meeting, and tomorrow's markets. stocks powered, the dow and s&p 500 to record highs on positive news about the labor market. for the first time ever, the dow traded above 15,000, and the s&p closed above 1600. and for the s&p, this was a long-time coming.
the index first closed above 1500 in march of 2000. so it took 13 years for the benchmark to crack this new psychologically important level. and here are the numbers. the dow surged 142 points today. but closed just below the 15,000 mark. the nasdaq jumped 38. the s&p rose 16 points, closing at 1614, a new record high. well, susie, investors snapped up stocks on news that american businesses added more jobs than expected in april. 165,000, to be precise, with the unemployment rate falling to 7.5%. average hourly earnings up .2 of a percent, and job numbers for february and march were revised sharply higher. we have two reports looking more closely at that surprising jobs report. and today's reaction on wall street. we begin with bob pisani at the new york stock exchange. >> it was the shock heard round the world. traders had convinced themselves that the april jobs report would
come in well below even lowered expectations, and when the report came in stronger than expected with prior months also revised upward, the markets reacted immediately, s&p futures moved up more than 10 points in a couple minutes. seconds after the open, the dow and the s&p were both at historic highs. over in europe, the german stock market moved over 100 points on the news. that's about 1.25% and closed at its high a couple hours later. stocks opened up and stayed near their highs throughout the day with volume above normal, and three stocks advancing for each one declining. traders especially bought competent, producing causely sensitive stocks like u.s. steel, truck-maker cummins, beeser homes and caterpillar. techs also shined with big moves up in sem conductor stocks like amd, micron andter adine. sea gate closed at an historic high after a strong earnings report wednesday. copper, a critical component of
the global economy, was up over 6%. its best showing in 18 months. can we go any further? [ no audio ] april government employment report pabts a picture of a job market improving more than most economists thought. at 7.5%, the unemployment rate is now at a four-year low because total employment is measured by the government's household survey increased by 293,000 last month. >> we saw that decline in the unemployment rate and this time it happened because of stronger
job growth. so all in all, i think a lot of optimism away from it. >> the big winners, restaurants and hotels, adding 45,000 new employees in the past two months. places like osteria, where bernard crawford just got a job this month. >> been unemployed for a while and heard the economy is catching back up. so, yeah, it feels really good. i have two kids, so really important for me. >> today at a washington, d.c. employment office, we found job-seekers checking out prospects online. some 210,000 people nationwide went back into the labor force in april. people like quinten gordon, out of work since the first of the year, but still optimistic. >> before this month is out, i'm sure i'll be employed and working. >> the economy has been creating an average of 208,000 jobs a month for the last six months. but top obama administration officials worry the sequester will reverse that trend. >> while we continue to see an
expansion of the economy, continue to see private sector job growth, i think if it weren't for the sequester, the economy would be in even a stronger position. >> that increase consumer spending produced april hiring that was broad-based. only construction in the government with sectors where we lost jobs. for "nightly business report," hampton pearson, washington. who better to tell us what all this means, but mario gabelli of gabelli funds. ladies first. diane, you get the first question. in all of the job numbers today, were there any soft spots? were there any signs of weakness in there you could point to? >> well, you know, as good as the numbers were, and i certainly celebrate, the composition of job growth is still very heavily weighted towards low-wage jobs. and we would like to see a reversal in that because we lost a lot of high-wage jobs to the great recession. three quarters of the jobs created since the recovery began have been in retail, manual
labor, food preparation where we saw a lot of the jobs created today. in-home health care where we also saw jobs created today. so, you know, although we're grateful for those jobs, a lot of them are part time. there were long-term workers coming off long-term unemployment. that was great, but then we saw a surge in the number of workers having to accept part-time instead of full-time employment for economic reasons. >> so these are sort of the partly employed workers. we also see a fair number of discouraged workers, people still staying out of the work force, not jumping in, right? >> exactly. there still is a large number of discouraged workers down from a year ago, the right trend to see. and this was a good reason to have a fall in the unemployment rate, real improvement in the unemployment rate so that's good news. but the part time nature is something we worry about. and i think this is something we have to be concerned about going forward, because longer people are out of the work force, we're seeing the really long-term unemployed or unable to rejoin. and there's a lot of collateral damage. >> the revisions for the
february -- the march and february numbers were significant. 114,000. >> unbelievable. i have a month over 300,000. hallelujah. >> i don't mean to nerd out here, but how to you miss 114,000 people? >> especially when a lot of them work for the government. i mean, i'm sorry, that is really hard. and, you know, it really gets to the issue of how much of a margin of error we're dealing with here with these jobs numbers. and, you know, that's part of the problem, is, you know, fool me once shame on you, fool me twice, shame on me. the good news, the revisions are on the up side now. we would much rather have them on the up side than down. the other numbers we need to point out, they decelerated. march was a great month -- february was a great month. march and april did decelerate. >> from the winter pace. >> they absolutely did. and april seasonal is kind of a favorite, as well. >> there were a lot of economic numbers that came out this week, and, of course, the fed met and said -- >> and -- >> we are ready to add to our bond purchases or constrict
those bond purchases. sum up the week's economic data. >> we're at an uneven recovery and that's why the federal reserve stands ready to do something. and you know, they would do less if they had complimentary fiscal policy helping the economy. we don't have that. and so without that, they're willing to do more, but they are limited in what they can do and starting to discuss that. are they being effective at what they're doing? that said, they're going to keep the pedal to the metal through june and summer. we'll see the federal reserve with low interest it rates for a long time to come. >> the job numbers, give it a final grade. a, b-plus, b? what is it? >> probably a b, which is better than what we have been. we have been a c, c-minus economy, but i never got a b when i was in school. >> diane, thank you very much. great to have you in the studio. >> susie, out to you. >> thanks. let's turn now to super mario, mario, you're our value investor. is it getting harder for you to find value in a market like this? >> we constantly look at annual
reports, visit a lot of companies and there is always something happening, particularly in the small companies. exciting, good times, deals, mergers, financial engineering. you're here in omaha because of warren buffett's berkshire hathaway shareholder meeting. a short while ago, reported earnings, shareholders will be happy, the numbers came in way bigger than expected, both on earnings and revenue side. the stock today hitting an all-time high. it is now at $162,000. it's up 21% so far year-to-date. would you tell investors to put new money into berkshire hathaway at this level? >> susie, when i started gabelli asset fund, first opened mutual funds, less than 3,000 share, and during that last 25 years, ups and downs in the world. at 162,000, i probably would want to own it. i would want to keep it the next five years but may not buy my entire position today. book is 120,000. they're going to make 10,000 a year for the next three or four
years. book will grow. and i think it will do okay the next ten years. >> there are some other value stocks you wanted to tell us about. top of your list is viacom. reported earnings this week, not so good. why -- >> well this is -- this is a entertainment company, you know it as nickelodeon, mtv, they own the paramount studios. very little capital expenditure, take the cash and buy back stock. and over the next three or four years, i think will make 50%-plus, 17% a year. the v.i.a. is $67, $68, and i think it will be $100 in three or four years. >> tell us about the next one, ticker symbol mdlz, interesting back story. why do you like it? >> well, mondoleze was a spinoff from kraft. went out and bought cad bury, which is chocolate, put it together with their products, global products, now she has a
global company. stock is around $31, earnings will grow double digits in the next five years and will capture the growing middle class in both india and china. great global plate. >> and it has a lot of the basic things people always want. you said chewing gum. >> well, biscuits, confectionary and chewing gum. very large categories, growing very nicely and good positions. and plus nelson buying stock. >> that always helps. >> and maybe. and maybe they'll merge. so the stock has not lost sight. >> let's talk about berkshire hathaway. you have been coming 10, 12 years. what do you want to hear from warren buffett tomorrow? >> basically reinforcing the notion how capital is allocated. concepts like where is he looking to put money, why does he like companies like heinz, why did he put $12 billion, $8 billion in a preferred, $4 billion in equity. and not complicated. he has made 20% k for 40 years.
so if he only earns 10% the next ten years, our clients will continue to double money. >> what do you think he's going to say, what will be the big headline from warren buffett tomorrow, whether about the markets, the economy? >> well, warren always likes to tweak something, whether the notion of the flavor of the day, which is dividends, why not pay a dividend, why not split the stock, what is he going to do with his $56 billion that he personally owns of the stock. and where is he going to make acquisitions and what is he going to do with records to the operating earnings. the housing market is booming. he's going to benefit. >> there's going to be 35,000 people here hanging on his every word. see you tomorrow. we'll be delighted to do that. >> thank you so much mario. you think of them as patrolling the skies in afghanistan or iraq, but unmanned aerial vehicles, better known as drones, may soon be coming to skies above you and in a good way. the federal aviation administration is opening american air space to more
drones in 2015, and they'll be commercial. not military. and with that increase, john fort tells us the industry is looking at not only creating more drones, but more jobs. >> first you screw the motor on here. >> reporter: chris anderson left his job as editor of "wired" magazine last year to chase what he calls a huge idea. planes that fly themselves. you and i call them drones. and in a struggling economy, they're a fresh idea that might provide a nice lift. the industry claims it could create as many as 100,000 jobs, adding $82 billion to gdp in the next 12 years. anderson's company has gone from 0 to nearly 100 employees and he's not alone. a drone maker based outside l.a. has seen its sales grow ten-fold. >> about ten years ago, we had between 2 and 300 people. today somewhere around 750
people. so it's been a significant growth period over the last decade. >> reporter: the key growth market for drones, farms. it turns out self-flying planes are an ideal way to it check for diseased plants or even do some crop dusting. outside of privately owned farmla farmland, there are limits to how quickly the business can grow from here. there is public perception, which pegs drones as military tools or privacy violators, and then regulators who have a little over two years to draw up rules governing how they're used. before they can do that, they've got to run tests, and a key deadline to apply as a drone test site is coming up monday. but the drone industry isn't just targeting farmers and big business. start-ups like 3-d robotics have personalized models that a hop hobbyist can get for less than 1,000 bucks. anderson believes it's going to be creative users of low-cost drones, like mainstream users of personal computers did a generation ago.
>> we put advanced technology in the hands of regular people. they figured out what it's for. >> for "nightly business report," i'm john fort. >> even the faa acknowledges the growth potential in drones, it projects that in the next five years, we could see as many as 7,500 small uavs in commercial use. but with 34 states currently trying to pass some form of anti drone legislation, both the industry and the faa could face an uphill battle. well, still ahead, meet the man who quit his job, risked it all, and became eventually america's wordsmith. but first, on this record-breaking day for stocks, a look at the top-performing s&p stocks today.
on wall street today, most of the dow stocks, not surprisingly, were in the green. but jpmorgan was one of the exceptions and that's where we begin our market focus. the giant bank was down on reports that regulators have found that one of its units manipulated trading in the electricity markets. jpmorgan denied its employees did anything wrong. shares of jpmorgan lost more than 1% to $47.57. moody's corporation reported quarterly profits way above expectations. and the firm raised its full year outlook, thanks to a pickup in corporate bond offerings and that means more demand for credit ratings. shares touched a six-year high before closing at $62 and change.
shares of discount brokers did well today. as investors bet that companies like schwab could benefit from a surge in trading season commissions. schwab itself traded near the top of the s&p 500, gaping more than 6%. and in a rare move today, shareholders of occidental petroleum voted out ray irani, who ran occidental for 20 years. shares gained more than 3%, closing at $90.76. on this problems friday, a story about someone who chucked it all, quitting a good job because he wanted to create games, word games. and he has done so well making well into six figures these days, that there's a good chance you're familiar with his work. in fact, it might not be too much of a stretch to call him america's wordsmith. >> if that's the way -- if everyone agrees, everyone has to agree. okay. >> reporter: who looks more puzzled, david hoyt or these fifth graders?
if your answer is david, that's okay. his specialty isn't solving puzzles. it's making them. >> i have become the most sibd indicated puzzle creator in the world. >> reporter: in the basement of his chicago home, starting about 4:00 a.m. every day, he master minds jumble, syndicated in more than 600 newspapers, reaching about 32 million people every single day. when he's done, there are about 13 others to piece together. >> i have word round-up that's in "usa today," up and down ward in "usa today." >> reporter: not bad for a high school dropout who never went to college. he traded options, and he did well but left him puzzled about his future. he noticed a friend was writing games and making money from it. >> i decided i'm going quit my job, save up a little bit of money and instantly become successful. well, that didn't quite work out. >> reporter: he tried peddling
this game and that, for four among years. it was a struggle, but his cup is half full attitude eventually paid off. >> if it i had been successful on my first run, i would have thought -- i would have thought i was much smarter than i actually was. in fact, i needed no, and then why. >> reporter: in 1996, he brought a word game into "tribune media services," hoping to marry it to their jumble brand. they bit and turned it into "jumble plus." but that was just the beginning. >> my brain just thought, wow, if they're willing to do this, maybe -- how about jumble cross words, jumble brain busters? >> reporter: it's no wonder the vp of licensing, steve tippy, is one of hoyt's biggest fans. >> i don't know anyone out there who has made as many versions or iterations of a single word puzzle jumble as he has. >> reporter: he kept at the various jumbles for 15 years, until, in 2011, he took over the original when his predecessor retired. teaming with cartoonist, jeff kanurik to breathe new life into
a brand around since the '50s. hoyt also developed word games for pat sajak's brand and now "word winder" where players aim to string words across the board. over beers on chicago's north side, hoyt and several friends polished a game they say has sold in the tens of thousands since it came out just last year. at about 20 bucks each. >> people have to work together. >> reporter: the classroom version? that bright idea belongs to an illinois school teacher who saw their demo at the chicago toy and game fair last fall. now, hoyt and his team are obsessed with finding a way to manufacture it at a cost schools can afford. it's a puzzle yet to be solved. >> it cost $800 to make. >> teachers have basically demanded we do this. they're not taking no for an answer. and the kids just love it. so now we have to do this. >> reporter: next week, in fact, hoyt and company plan to begin a kickstarter campaign to help fund production of the
giant-sized word winder. they hope to raise enough cash to get the price down to around $225 forrel schools. and coming up, the big business behind the most exciting two minutes in sports. but first, here's our commodities treasuries and currencies fair today. tomorrow is the running of the 139th kentucky derby.
the event, complete with the pageantry, hats, mint juleps is much more than a horse race, of course. it's a cultural event. and as brian shactman tells us, it's big business, foo tao. >> reporter: everything about the kentucky derby is big. big economic impact, more than $300 million just at churchill downs. big crowds, 160,000-strong on race day, big hats, and big price tags. beyond the $2 million purse for the race itself, there is immense cost. from the optional luxuries of attendance to the necessities of racing. >> let's start with luxury. this just open area is called the mansion. it has all the amenities you might imagine from the name, including your own personal butler service, and the best view of the track. >> reporter: prices to get into the mansion range from 7,000 to $12,500. how about this mint julep? >> mint leaves dusted with gold.
wood ford reserved bourbon at a price at $1,000. as for the taste, you'll have to buy one for yourself. >> reporter: horse racing itself is incredibly expensive. just getting the horses to louisville can cost hundreds of thousands of dollars. lines of battle came from ireland in the horse version of first class. >> in this particular situation, the horse has made over $100 million on the race tracks, so the clients are willing to take and reinvest that money and a significant amount of money to win a race like the kentucky derby. >> reporter: that cost about a quarter million dollars, but a derby win would triple that in prize money and millions more in breeding when he goes out to pasteur. for "nightly business report" brian shactman, louisville, kentucky. coming up on monday, my interview with warren buffett, and saturday i'll also be tweeting what the oracle of omaha says on a wide variety of topics at the berkshire meeting.
and buffett might be doing some tweets himself. i understand he already has more than 300,000 followers. so it will be very interesting to see what he's going to be tweeting. >> if there is another 82-year-old guy who has 300,000 twitter followers, i'd like to meet him. he is a guy who stays hip beyond his years. i've never been out there to omaha for this event, susie. give us some sense of the color and what your day will be like tomorrow. >> well, for starters, i'll start at 5:15 in the morning, because warren buffett starts that early in the morning. and there are going to be something like 35,000 people who are coming from all over the world to hear everything that he has to say, and his sidekick, vice chairman of berkshire, charlie monger. he's 89 years old. >> wow, what a day it will be. >> exactly. interesting. that's "nightly business report" for tonight. thanks for watching. >> i'm tyler mathisen. have a great evening and fabulous weekend. see you back here monday with warren buffett. >> "nightly business report" has
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